A manufacturer sells a particular product in both Argentina and the U.S. In Argentina, the manufacturer has
Fantastic news! We've Found the answer you've been seeking!
Question:
(a) For sales of this product in Argentina, calculate the breakeven sales level for a $20 price increase. Show your work.
(b) In the U.S., the manufacturer's price for this product is $400 and the contribution margin is 50 percent. The manufacturer knows that, because of gray market commerce, every one-unit change of sales of this product in Argentina leads to a 0.15-unit sales change in the opposite direction in the U.S. Given this information, recalculate the breakeven sales level in Argentina described in Part (a). Show your work.
(c) Describe the concept of a price corridor. Then explain how the difference between the breakeven you calculated in Part (b) and the one you calculated in Part (a) is helpful for applying the price-corridor concept in this situation.
Related Book For
Accounting Business Reporting For Decision Making
ISBN: 9780730369325
7th Edition
Authors: Jacqueline Birt, Keryn Chalmers, Suzanne Maloney, Albie Brooks, Judy Oliver, David Bond
Posted Date: